The cost of India’s AI data centre boom | LME 157 | Pooja Prasanna
Let’s say an AI data centre is coming to your neighbourhood, it’s easy to feel like you’ve been chosen for the future.
Like the Avengers just set up Headquarters next door.
But then you look at the cost.
Enormous amounts of electricity.
Millions of litres of water. Hundreds of acres of land. And surprisingly few jobs.
New York, Texas, Virginia
These are all states in the US that are shutting down data centres
An estimate by Tech Radar says in just the first three months of 2026, $130 billion worth of date centre projects have been blocked or delayed across the US.
And a Reuters-Ipsos poll in June found something interesting. A majority of Americans did not oppose data centres in general. But 59 percent said they did not want one built within ten miles of their home.
In other words, people may like the idea of AI.
They just don't necessarily want the infrastructure in their backyard.
And here is the strange part.
While other countries and communities are asking questions, India is competing to attract more data centres.
To the extent that the government is inviting companies to set up data centres in ecologically sensitive Great Nicobar and Little Andaman.
In Andhra Pradesh's Visakhapatnam alone, proposed data centres add up to around 9 gigawatts.
So why is India inviting this boom?
What does it mean for our water, electricity and land?
And when people call this a new form of colonialism, is that just rhetoric, or is there something more to the argument?
Let me explain
For this episode on data centres, we wanted to go beyond just picking up information from here and there.
So we spoke to people on the ground who have been affected by these projects, activists, technology experts, and bureaucrats in different states.
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Now, let's break this down.
An AI data centre isn't just a building full of computers.
It is essentially a giant factory for computation.
Instead of a factory that takes raw materials and produces- let’s say cars or steel, a data center takes enormous amounts of data and computing power and produces AI models and services.
And like any factory, it needs resources.
Land.
Electricity.
Water.
And eventually, people.
So those are the questions we need to ask.
First, where does the land, electricity and water come from?
How many jobs do these projects actually create?
And finally, who is really benefiting from all of this?
Let's start with land.
Ramakrishna is a resident of Tarluwada. She was cultivating land for years when it was acquired for the Google-Adani data-centre project.
Like her, nearly 50 landless Dalit families had to give up their land.
And this is where the scale becomes important.
The Google-Adani project in Vizag has been allotted more than 600 acres.
Some of that also includes land belonging to the Simhachalam temple.
Some of the project land is also close to the Kambalakonda Wildlife Sanctuary.
So now there are legal challenges around the land, wildlife and environmental impact.
Therefore the first question is pretty basic.
When we say India is building the infrastructure for the AI boom, whose land are we building it on?
Now to the question of water
Data centers aren't ordinary computer buildings.
The chips inside them get extremely hot.
They need cooling.
And depending on the technology being used, that can mean significant amounts of water.
The scale is difficult to imagine.
Google's data-centre campus in Iowa used about one billion gallons of water in 2024.
That works out to more than 10 million litres of water every single day.
For comparison, a city like Bengaluru needs around 2,600 million litres of fresh water a day.
But this isn't Iowa.
This is Visakhapatnam.
And Visakhapatnam is already water-stressed.
The city gets around 410 million litres a day against a stated requirement of about 480 million.
Water rationing is common.
The Andhra Pradesh government says projects such as Polavaram and new desalination plants will provide enough water. They insists that drinking and residential water will not be diverted to data centres.
But activists aren't convinced.
And even the technology companies themselves acknowledge that cooling systems differ.
Google says its Vizag project will use advanced air cooling.
The environmental documents for the three Google-Adani parks say two of them would require around 500 kilolitres of water a day each.
Karnataka govt told us that the 32 data centres, most of them in Bengaluru use over 4,000 kilolitres per day. 9 more large data centers are going to be set up soon in the state.
That is nowhere near the Iowa figure.
Which is why we shouldn't simply take the largest water-use number from America and assume every Indian data centre will use the same amount.
But when a project like the Vishakapattinam one is touted to be among the world's biggest, the question still deserves to be asked.
Where will the water come from?
And who gets priority when there isn't enough?
Which brings us to the next resource.
Electricity.
The estimated electricity requirement for the Google-Adani Vizag project is around 1.6 gigawatts.
There are also hundreds of diesel generators for backup.
And the Union Ministry of Power projects India's data-centre electricity demand could reach around 13.6 gigawatts by 2031-32.
That is a huge amount of power.
And governments are already making special arrangements for these facilities.
Telangana, for example, exempts data centres from statutory power cuts.
So here's the question.
If a data centre is guaranteed uninterrupted electricity, what happens when there is a shortage?
Who gets priority?
And there is another development worth watching.
Andhra Pradesh and Uttar Pradesh are giving data-centre companies distribution licences, allowing them to generate, transmit or buy their own electricity.
India is also opening up private participation in nuclear power.
And officials in one southern state told us there are discussions around using small nuclear reactors to generate power for these facilities.
Google says 66 percent of the energy used across its data centres comes from carbon-free sources.
But in the Asia-Pacific region, that figure drops to just 12 percent.
So the question isn't simply how much electricity these data centres consume.
It's also where that electricity comes from.
And who pays for the infrastructure needed to provide it.
Now let's come to something governments often point to as the big benefit.
Jobs.
Because if you are giving companies land, power, water and tax concessions, you need to be able to explain what the public is getting in return.
And one of the biggest arguments is that these projects will create high-paying jobs.
Karnataka govt told us that the nine new data centres which will make an investment of 24000 crore rupees will produce 2,694 jobs
Andhra Pradesh minister Nara Lokesh says the data-centre ecosystem in Andhra Pradesh could create close to 60,000 high-paying jobs.
That sounds impressive.
But look at the project proposals for the three Google-Adani parks.
They list just 1,725 permanent jobs and 300 temporary jobs once it starts operation.
Even though the 60,000 number is for all data centres put together, where is it coming from? It could be including construction as you need thousands of people and those jobs matter.
But once the building is up and the machines are running, you need far fewer.
That is the nature of a hyperscale data centre.
It is extremely capital-intensive.
So if the government is offering land, electricity, water, tax concessions and other subsidies, we have to ask a very simple question.
What exactly are Indians getting back?
Because governments are not just welcoming these companies.
They are actively paying to attract them.
The Union Budget has offered a tax holiday until 2047 for foreign companies providing global cloud services using Indian data centres.
India also allows 100 percent foreign investment in data centres through the automatic route.
The Union government says investments of around $70 billion are already underway, with another roughly $90 billion announced.
States are offering incentives too.
Telangana has classified data-centres as essential service and offers support around power, fuel, land, internet, water and even security.
And Telangana is planning a 1,500-acre data-centre city at Aloor.
Andhra Pradesh offers capital and power incentives as well.
For the Google project, the 22000 crore rupee package includes a 25 percent discount on land, a 25 percent discount on industrial water, reimbursement of state GST during construction, and electricity and water subsidies that continue for years.
So the next time you criticise a free bus pass for women or welfare measures for the poor- think of this statistic.
So let's put that on screen.
Land.
Water.
Electricity.
Tax breaks.
Public money.
These are all things India is putting into the AI boom.
And in return, we are told we will get investment, jobs and a place in the global AI economy.
Which brings us to a much bigger question.
Who actually captures the value?
Because this is where you start hearing a very loaded word.
Colonialism.
Now, obviously, nobody is saying that a foreign technology company is literally setting up a colony in India.
The argument is about the pattern.
Historically, colonial economies often involved taking land, labour and natural resources from one place, while the profits and control accumulated elsewhere.
So look at AI.
The models are built using enormous amounts of human-created material: books, websites, code, images, conversations and research.
The physical infrastructure requires land, water, electricity and minerals.
There is also a global labour chain behind AI, from data labelling to content moderation and other low-paid digital work, much of it outsourced to countries in Asia.
So you have resources and labour coming from different parts of the world.
And you have companies that control the computing infrastructure, the models and increasingly the services built on top of them.
That is why some activists use terms such as “data colonialism” or “digital colonialism”.
The question is not whether foreign companies are automatically bad.
And it certainly isn't that India should reject technology or investment.
The real question is whether India has enough bargaining power, regulation, transparency and public participation to make sure that the value created here doesn't simply flow elsewhere while the costs stay here.
Think of it as a pipeline.
Land, water, electricity and other resources go in.
Computing happens here.
And then the question is:
Where does the value come out?
And Indians aren’t the only ones asking it.
New York has imposed a statewide moratorium.
Amsterdam has paused new construction.
Australia is moving towards rules around water use and electricity demand.
And India has seen resistance too.
People in Thane and Visakhapatnam have protested.
In Vizag, children have even marched with signs saying:
“We cannot drink DATA.”
And that brings us back to where we started.
This isn't about saying AI is good or bad.
It isn't about saying India should stop building data centres.
India clearly wants a place in the AI economy, and there is a legitimate argument that we need this infrastructure if we want to compete.
But infrastructure has a cost.
And somebody pays that cost.
So when a government says it is bringing an AI data centre to your city, the question shouldn't simply be:
How much investment is coming?
It should also be:
Who is paying for it? Directly or indirectly.
Produced by Megha Mukundan, Script by Lakshmi Priya, Jahnavi, edit by Nikhil Sekhar, camera by Ajay R
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